Saudi Arabia, UAE Aim to Cut Payments Costs With Common Digital Currency

Saudi Arabia, UAE Aim to Cut Payments Costs With Common Digital Currency

Saudi Arabia, UAE Aim to Cut Payments Costs With Common Digital Currency

The two countries remain positive on the future development of remittance systems using blockchain and distributed ledger technologies.

According to the Saudi Arabian Monetary Authority (SAMA) and the Central Bank of the United Arab Emirates, this new blockchain initiative is set to help the countries to make financial settlements between them using the blockchain technology.

While the central remittance systems in both countries have "evolved overtime and proved their feasibility", global remittances have need for improvement, the central banks said. The joint digital currency will be used only by a limited number of banks in both countries.

The project will study the feasibility of the currency through "practical application" and determine its impact on reducing remittances costs while assessing the technical risks. Therefore, the two countries undertook the experiment of issuing a common digital currency to be used across borders for transfers. However, there are still some aspects of worldwide remittances that need further development.

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In a statement released this morning, the two central banks also pledged to establish additional means to enable local banks to deal directly with each other in conducting financial remittances. Based on this desire, the two countries do not only aspire to be the forerunners in the application of modern technologies, but also in their adaptation, development and delivery to the world.

The statement has not outlined a specific date for the launch of the digital currency but it mentions that the concentration will be on the technical aspects and if no technical issues are encountered, economic and legal requirements for future uses will be considered.

SAMA and UAECB agreed that at the initial stage of project implementation they will focus on technical aspects.

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